Caterpillar reported better-than-expected quarterly earnings but the shares were falling. There just isn’t enough growth these days.
Caterpillar announced Thursday fourth-quarter earnings per share of $5.14 from sales of $16.2 billion. Wall Street was looking for profit of $5.05 from sales of $15.8 billion, according to Bloomberg.
A year ago, adjusted earnings per share were $5.26 and sales were $17 billion.
For 2025, the maker of construction and mining equipment, expects full-year sales slightly lower than 2024. That’s roughly in line with Wall Street projections. Analysts are looking for $64.1 billion in 2025 sales. Caterpillar turned in $64.8 billion sales in 2024.
Caterpillar stock was down 4.1% in premarket trading at $377.18 a share while S&P 500 and Dow Jones Industrial Average futures each were up about 0.4%.
Results looked OK, but there isn’t much growth these days. Sales have fallen year over year for three consecutive quarters. Wall Street doesn’t expect sales growth to return until the second half of 2025.
Falling sales amid weakening construction and mining end markets are a risk. U.S. and Chinese manufacturing industries are both contracting.
Still, investors are focused on rewards. Coming into Thursday, Caterpillar stock has risen about 30% over the past 12 months, beating the S&P 500 by about 8 percentage points.
Investors see a recovery coming. But “is 2025 closer to peak or trough?” asked UBS analyst Steven Fisher in a preview report. Investors like to buy shares of cyclical companies — such as Caterpillar — at the bottom of an economic cycle.
“As with most cyclical industrials, Cat trades counter-cyclically; the multiple is lowest when earnings are at peak, and highest when earnings are at trough,” added the analyst. “To be clear, we do not expect Cat’s earnings to grow much over the next one to two years.”
This isn’t a true trough. It’s a reason he is bearish on Caterpillar stock. Fisher rates shares Sell and has a $355 price target.
Whether the company can grow from here is the key question for 2025. Caterpillar results show that isn’t guaranteed.
Overall, about 40% of analysts covering the stock rate shares Buy. The average Buy-rating ratio for shares in the S&P is about 55%. The average analyst price target for Caterpillar stock is about $398.